##### Table of Contents

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 20-F**

 

 

**OR**

 

**FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2011**

**OR**

 

**FOR THE TRANSITION PERIOD FROM            TO            **

**OR**

 

**Date of event requiring this shell company report                    **

**COMMISSION FILE NUMBER: 001-35052**

 

**(Exact name of Registrant as specified in its charter)**

 

**(Translation of Registrant’s name into English)**

 

**(Jurisdiction of incorporation or organization)**

 

**(Address of principal executive offices)**

 

**(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)**

Securities registered or to be registered pursuant to Section 12(b) of the Act. 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: 

The number of outstanding shares of each of the issuer’s classes of capital stock 

as of December 31, 2011: 

120,531,045 Common Shares, par value $1.50 per share 

Indicate by check mark if the registrant isa well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.    Yes   ̈    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934.    Yes   ̈    No  x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check one): 

Large acceleratedfiler   ̈                 Acceleratedfiler   ̈                 Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

If “Other” has been checked in response to the previous question, indicate by check mark which financialstatement item the Registrant has elected to follow:      Item 17   ̈    Item18   ̈

If this is an annual report, indicate by check mark whether the registrant isa shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 
     **Page** 
Forward-Looking Statements
   ii  
Presentation of Financial and Other Information
   iii  
PART I
   1  
Item 1. Identity of Directors, Senior Management and Advisers 
   1  
Item 2. Offer Statistics and Expected Timetable
   1  
Item 3. Key Information
   1   A. Selected Financial Data   1   B. Capitalization and Indebtedness   8   C. Reasons for the Offer and Use of Proceeds   8   D. Risk Factors   9  
Item 4. Information on the Company
   34   A. History and Development of the Company   34   B. Business Overview   37   C. Organizational Structure   82   D. Property, Plants and Equipment   82  
Item 4A. Unresolved Staff Comments
   83  
Item 5. Operating and Financial Review and Prospects
   83   A. Operating Results   85   B. Liquidity and Capital Resources   114   C. Research And Development, Patents and Licenses, Etc.   120   D. Trend Information   121   E. Off-Balance Sheet Arrangements   121   F. Tabular Disclosure of Contractual Obligations   121   G. Safe Harbor   121  
Item 6. Directors, Senior Management and Employees
   122   A. Directors and Senior Management   122   B. Compensation   126   C. Board Practices   126   D. Employees   129   E. Share Ownership   129  
Item 7. Major Shareholders and Related Party Transactions
   132   A. Major Shareholders   132   B. Related Party Transactions   134   C. Interests of Experts and Counsel   135  Item 8. Financial Information   135   A. Consolidated Statements and Other Financial Information   135   B. Significant Changes   136  
Item 9. The Offer and Listing
   136   A. Offer and Listing Details   136   B. Plan of Distribution   136   C. Markets   136   D. Selling Shareholders   136   E. Dilution   137   F. Expenses of the Issue   137  
Item 10. Additional Information
   137   A. Share Capital   137   B. Memorandum and Articles of Association   137   C. Material Contracts   145   D. Exchange Controls   146   E. Taxation   149   F. Dividends and Paying Agents   155   G. Statement by Experts   155   H. Documents on Display   155   I. Subsidiary Information   155  
Item 11. Quantitative and Qualitative Disclosures About Market Risk
   155  
 
i 

Table of Contents
Item 12. Description of Securities Other than Equity Securities 
   156   A. Debt Securities   156   B. Warrants and Rights   156   C. Other Securities   156   D. American Depositary Shares   156  
PART II
   156  
Item 13. Defaults, Dividend Arrearages and Delinquencies
   156  
Item 14. Material Modifications to the Rights of Security Holders and Use ofProceeds
   156  
Item 15. Controls and Procedures
   156  
Item 16A. Audit Committee Financial Expert
   157  
Item 16B. Code of Ethics
   157  
Item 16C. Principal Accountant Fees and Services
   157  
Item 16D. Exemptions from the Listing Standards for Audit Committees
   158  
Item 16E. Purchases of Equity Securities by the Issuer and AffiliatedPurchasers
   158  
Item 16F. Change in Registrant’s Certifying Accountant
   158  
Item 16G. Corporate Governance
   158  
Item 16H. Mine Safety Disclosure
   160  
PART III
   160  
Item 17. Financial Statements
   160  
Item 18. Financial Statements
   160  
Item 19. Exhibits
   160  
**FORWARD-LOOKING STATEMENTS**

This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projectionsabout us and our industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/arelikely to,” “may,” “plan,” “should,” “would,” or other similar expressions. The forward-looking statements included in this annual report relate to, among others: 

 
 • 
our business prospects and future results of operations; 

 
 • 
weather and other natural phenomena; 

 
 • 
developments in, or changes to, the laws, regulations and governmental policies governing our business, including limitations on ownership of farmlandby foreign entities in certain jurisdiction in which we operate, environmental laws and regulations; 

 
 • 
the implementation of our business strategy, including our development of the Ivinhema mill and other current projects; 

 
 • 
our plans relating to acquisitions, joint ventures, strategic alliances or divestitures; 

 
 • 
the implementation of our financing strategy and capital expenditure plan; 

 
 • 
the maintenance of our relationships with customers; 

 
 • 
the competitive nature of the industries in which we operate; 

 
 • 
the cost and availability of financing; 

 
 • 
future demand for the commodities we produce; 

 
 • 
international prices for commodities; 

 
 • 
the condition of our land holdings; 

 
ii 

Table of Contents • 
the development of the logistics and infrastructure for transportation of our products in the countries where we operate; 

 
 • 
the performance of the South American and world economies; 

 
 • 
the relative value of the Brazilian Real, the Argentine Peso, and the Uruguayan Peso compared to other currencies; and 

 
 • 
the factors discussed under the section entitled “Risk Factors” in this annual report. 

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in theseforward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. In light of the risks and uncertainties described above, the estimates andforward-looking statements discussed in this annual report might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factorsmentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements. 

The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made. We undertake no obligation to update any forward-lookingstatements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. 

**PRESENTATION OF FINANCIAL AND OTHER INFORMATION**

**CertainDefined Terms**

In this annual report, unless otherwise specified or if the context so requires: 

 
 • 
References to the terms “Adecoagro S.A.,” “Adecoagro,” “we,” “us,” “our,” “Company” and“our company” refer to, Adecoagro S.A., a corporation organized under the form of a *société anonyme*under the laws of the Grand Duchy of Luxembourg, and its subsidiaries, except in the case of historical financial andoperating information and results where we are referring to IFH LLC and unless otherwise indicated. 

 
 • 
References to “IFH” and “IFH LP” mean International Farmland Holdings, LP, a limited partnership (previously International FarmlandHoldings, LLC, or IFH LLC) organized under the laws of Delaware, and its subsidiaries. 

 
 • 
References to “Adecoagro LP” mean Adecoagro, LP, a limited partnership (previously Adecoagro, LLC) organized under the laws of Delaware, andits subsidiaries. 

 
 • 
References to “$,” “US$,” “U.S. dollars” and “dollars” are to U.S. dollars. 

 
 • 
References to “Argentine Pesos,” “Pesos” or “Ps.” are to Argentine Pesos, the official currency of Argentina.

 
 • 
References to “Brazilian Real,” “Real,” “Reais” or “R$” are to the Brazilian Real, the official currency ofBrazil. 

 
 • 
Unless stated otherwise, references to “sales” are to the combined sales of manufactured products and services rendered plus sales ofagricultural produce and biological assets. 

**Financial Statements**

***Background***

As part of a corporate reorganization (the “Reorganization”), Adecoagro, a Luxembourg corporation under the form of a *société anonyme*, was formed as a holding company forIFH for the purpose, among others, of facilitating 

 
iii

Table of Contents
the initial public offering (the “IPO”) of our common shares, completed on January 28, 2011. Before the IPO, Adecoagro had not engaged in any business or other activities except inconnection with its formation and the Reorganization. For an additional discussion of the Reorganization, see “Item 4. Information of the Company—A. History and Development of the Company—History.” 

The Reorganization was limited to entities which were all under the control of the same shareholder group and was implemented in part tofacilitate the IPO. In accordance with IFRS, the Reorganization did not qualify as a business combination under common control; rather, it was a simple reorganization of the capital of IFH. The Reorganization was completed on October 30, 2010.In accordance with IFRS, the Reorganization was retroactively reflected in the consolidated financial statements as of and for the year ended December 31, 2010. Therefore, all financial and other information herein relating to December 2010,2009, 2008 and 2007 are presented using the historical values from the consolidated financial statements of IFH. However, the issued share capital reflects that of Adecoagro as of the Reorganization date. 

On January 10, 2011, our board of directors voted in favor of a proposal to change the nominal value of the equity shares of theCompany from the nominal value of $1 each to the nominal value of US$1.50 each (the “Reverse Stock Split”). This proposal was approved at a duly convened extraordinary general meeting of shareholders held on January 24, 2011, pursuantto Luxembourg law, which reduced our total shares outstanding from 119,999,997 shares to 79,999,985 shares. On February 2, 2011, the Company completed its IPO when it increased its total shares outstanding from 79,999,985 shares to 120,069,222,after giving effect to the exercise of the underwriters over-allotment option on February 11, 2011. 

During 2011, wecontributed the net proceeds of the IPO to increase our interest in IFH from 98% to 98.64%. 

During March, 2012, we issued696,618 shares to certain limited partners of IFH in exchange for their residual interest in IFH, totaling 0.57230%, thereby increasing our interest in IFH to 99.2%. 

The consolidated financial statements as of December 31, 2011, 2010, and 2009 and for the years then ended included in this annual report have been prepared in accordance with International FinancialReporting Standards of the International Accounting Standards Board (“IASB”) and the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), together IFRS. All IFRS issued by the IASB,effective at the time of preparing the consolidated financial statements have been applied. The consolidated financial statements as of December 31, 2011, 2010 and 2009 and for the years then ended are hereinafter referred to as the“consolidated financial statements”. 

**Non-IFRS Financial Measures**

We present Adjusted Consolidated EBITDA, Adjusted Segment EBITDA, Adjusted Consolidated EBIT and Adjusted Segment EBIT in this annualreport as supplemental measures of performance of our company and of each operating segment, respectively, that are not required by, or presented in accordance with IFRS. Our Adjusted Consolidated EBITDA equals the sum of our Adjusted SegmentEBITDAs for each of our operating segments. We define “Adjusted Consolidated EBITDA” as consolidated net profit or loss for the year, as applicable, before interest expense, income taxes, depreciation and amortization, foreign exchangegains or losses, other net financial expenses and unrealized changes in fair value of our long-term biological assets, primarily our sugarcane and coffee plantations, and cattle stocks. We define “Adjusted Segment EBITDA” for each of ouroperating segments as the segment’s share of consolidated profit from operations before financing and taxation for the year, as applicable, before depreciation and amortization and unrealized changes in fair value of our long-term biologicalassets. We believe that Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are important measures of operating performance for our company and each operating segment, respectively, because they allow investors and others to evaluate andcompare our consolidated operating results and to evaluate and compare the operating performance of our segments, respectively, including our return on capital and operating efficiencies, from period to period by removing the impact of our capitalstructure (interest expense from our outstanding debt), asset base (depreciation and amortization), tax consequences (income taxes), unrealized changes in fair value of biological assets (a significant non-cash gain or loss to our consolidatedstatements of income following IAS 41 accounting), foreign exchange gains or losses and other financial expenses. Other companies may calculate Adjusted Consolidated EBITDA and Adjusted Segment EBITDA differently, and therefore our AdjustedConsolidated EBITDA and 

 
iv 

Table of Contents
Adjusted Segment EBITDA may not be comparable to similarly titled measures used by other companies. Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are not measures of financialperformance under IFRS, and should not be considered in isolation or as an alternative to consolidated net profit (loss), cash flows from operating activities, segment’s profit from operations before financing and taxation and other measuresdetermined in accordance with IFRS. Items excluded from Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are significant and necessary components to the operations of our business, and, therefore, Adjusted Consolidated EBITDA and AdjustedSegment EBITDA should only be used as a supplemental measure of our company’s operating performance, and of each of our operating segments, respectively. We also believe Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are useful forsecurities analysts, investors and others to evaluate the financial performance of our company and other companies in the agricultural industry. These non-IFRS measures should be considered in addition to, but not as a substitute for or superior to,the information contained in either our statements of income or segment information. 

Our Adjusted Consolidated EBIT equalsthe sum of our Adjusted Segment EBITs for each of our operating segments. We define “Adjusted Consolidated EBIT” as consolidated net profit or loss for the year, as applicable, before interest expense, income taxes, foreign exchange gainsor losses, other net financial expenses and unrealized changes in fair value of our long-term biological assets, primarily our sugarcane and coffee plantations, and cattle stocks. We define “Adjusted Segment EBIT” for each of our operatingsegments as the segment’s share of consolidated profit from operations before financing and taxation for the year, as applicable, before unrealized changes in fair value of our long-term biological assets. We believe that Adjusted ConsolidatedEBIT and Adjusted Segment EBIT are important measures of operating performance, for our company and each operating segment, respectively, because they allow investors and others to evaluate and compare our consolidated operating results and toevaluate and compare the operating performance of our segments, from period to period by including the impact of depreciable fixed assets and removing the impact of our capital structure (interest expense from our outstanding debt), tax consequences(income taxes), unrealized changes in fair value of biological assets (a significant non-cash gain or loss to our consolidated statements of income following IAS 41 accounting), foreign exchange gains or losses and other financial expenses. Othercompanies may calculate Adjusted Consolidated EBIT and Adjusted Segment EBIT differently, and therefore our Adjusted Consolidated EBIT and Adjusted Segment EBIT may not be comparable to similarly titled measures used by other companies. AdjustedConsolidated EBIT and Adjusted Segment EBIT are not measures of financial performance under IFRS, and should not be considered in isolation or as an alternative to consolidated net profit (loss), cash flows from operating activities, segment’sprofit from operations before financing and taxation and other measures determined in accordance with IFRS. Items excluded from Adjusted Consolidated EBIT and Adjusted Segment EBIT are significant and necessary components to the operations of ourbusiness, and, therefore, Adjusted Consolidated EBIT and Adjusted Segment EBIT should only be used as a supplemental measure of the operating performance of our company, and of each of our operating segments, respectively. We also believe AdjustedConsolidated EBIT and Adjusted Segment EBIT are useful for securities analysts, investors and others to evaluate the financial performance of our company and other companies in the agricultural industry. 

**Fiscal Year and Harvest Year**

Our fiscal year begins on January 1 and ends on December 31 of each year. However, our production is based on the harvest year for each of our crops, rice and coffee. A harvest year variesaccording to the crop, rice or coffee plant and to the climate in which it is grown. Due to the geographic diversity of our farms, the planting period for a given crop, rice or coffee may start earlier on one farm than on another, causingdifferences in their respective harvesting periods. The presentation of production volume (tons) and product area (hectares) in this annual report, in respect of the harvest years for each of our crops, rice and coffee, starts with the first day ofthe planting period at the first farm to start planting that harvest year and continues to the last day of the harvesting period of the respective crop, rice or coffee on the last farm to finish harvesting that harvest year, as shown in the tablebelow. 

 
v 

Table of Contents